A branch of the Russian federal government has recently published a draft of new litigation called “On Digital Financial Assets,” which is focused on enforcing strict cryptocurrency laws in the country. Since the beginning of the debate in 2018 in Russia, the laws against cryptocurrencies fail in Russia.
The new laws define Bitcoin as property but not legal tender, and propose, that Bitcoin miners register as individual companies; once regulated, the government will be able to put the tax on their mining activity. President Putin is planning on developing and revealing a new tax for Bitcoin miners by July 1. On the other hand, many are skeptical about the government’s ability to regulate the cryptocurrency industry.
In spite of this recent development towards increased regulation of digital assets, Russian peer-to-peer Bitcoin transactions have spiked significantly.
The popularity of cryptocurrency in the world
It is clear that financial technology and the shift toward online banking, investing and cryptocurrencies are changing the world.
Debit and credit cards, online banking, and the popularity of digital receipts with the simple snap of a picture on your phone may turn paper money and other paper documents obsolete very soon. The free investing app Robinhood caused a surge of millennial investors to join around the coronavirus pandemic, rocking the United States stock market and creating financial gains that even the experts couldn’t predict. Now, even PayPal and Venmo are discussing rolling out their own crypto buying and selling platform.
With nearly 84% of millennials either owning a website or using social media daily as a means to support their income, it is obvious that the internet is the new frontier for earning, managing, and investing money. However, many in the government have concerns that rapidly developing cryptocurrency will become like Wild West. In other words, it might become where lawlessness and illegal activities rule blockchains the world over.
Peer-to-peer exchanges and trades are booming in Russia
This new development regarding Russian regulation of digital assets has not put a damper on peer-to-peer exchanges and trades. Coin Dance statistics indicate that Russia accounted for 20% of Localbitcoins trade volume in May — the second month in a row that the country has topped the charts for trade volume.
“We are following the legal situation in Russia,” a spokesperson for Localbitcoins claimed, adding, “We hope that Russian people will continue to have access to Bitcoin and its benefits in the future too.”
However, it seems like most Russian cryptocurrency aficionados have no or little concerns about the matter.
Artem Tolkachev, the Russian founder and CEO of digital asset investment platform Tokenomica, is skeptic. He believes the legislation draft is more a failed attempt to understand cryptocurrencies than a new development in the industry. Tolkachev said:
“Given the Central Bank’s prohibitive stance and other law-making actors’ lack of expertise with the subject, the [presidential] order has been executed in a purely formal fashion — with the view to ostensibly develop regulation while refraining from taking any tangible decisions in the text. The resulting bill, ‘On Digital Financial Assets,’ has gone through several editions, but it never got close to regulating the most pressing matters.”
The future of law for cryptocurrencies in Russia?
We are certain that rapidly developing financial technology is questioning our traditional methods of banking and investing. As this process progresses, many wonder whether governments and even economic experts adequately understand the new online frontier of finance. So far, laws against cryptocurrencies fail in Russia; that much we can witness.
It’s clear that many Russian investors believe in the future of cryptocurrency. It is safe to say that people have much less faith that their government can ever stop this industry’s growth. They are playing a high-stakes gamble investing money in the hopes that Bitcoin pays off as an investment.